The problem resides on the fact that IOUs can be backed by thin air. You need to trust third parties, and this is the very core problem Bitcoin was designed to address.

IOUs *can* be backed by thin air, but they don't have to be. Surely you're not suggesting that systems like Ripple and Bitcoin should protect people from making bad decisions.

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We all know how we ended up in this huge financial crisis. Spirals of debt backed up by nothing. Ripple reproduces this fatally flawed system in a p2p fashion.

"People can use Ripple to do bad things therefore Ripple is bad." I utterly reject this argument. The correct question is, "Can people use Ripple to do good things?"

Imagine if hammers were new. We'd hear arguments like, "Hammers are bad because you can hit someone in the head with them. When hammers go on sale, everyone using them will have sore thumbs and be beating people on the head". When something is new, it's hard to recognize these arguments for what they are, but this *is* what they are.

Does Ripple require you to accept IOUs backed by thin air? No. Does Ripple prevent you from telling the difference? No. Does Ripple let you choose precisely which IOUs you accept? Yes. Will people occasionally make mistakes and get hurt by them? Probably. But the same is true of pretty much everything.

If you think about my federation example and imagine PayPal and Dwolla both federate through Ripple, it will be PayPal and Dwolla that will be managing the issuers. To the users of both payment systems, it will be just like they were paying another user on that same payment system.

Joel if the owners of Ripple decide to liquidate or dismantle for what ever reason what happens to the Ripple system? If XRP are centralized am I correct in thinking that if government wanted to shut you down the entire network would fall apart?

The problem resides on the fact that IOUs can be backed by thin air. You need to trust third parties, and this is the very core problem Bitcoin was designed to address.

IOUs *can* be backed by thin air, but they don't have to be. Surely you're not suggesting that systems like Ripple and Bitcoin should protect people from making bad decisions.

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We all know how we ended up in this huge financial crisis. Spirals of debt backed up by nothing. Ripple reproduces this fatally flawed system in a p2p fashion.

"People can use Ripple to do bad things therefore Ripple is bad." I utterly reject this argument. The correct question is, "Can people use Ripple to do good things?"

Imagine if hammers were new. We'd hear arguments like, "Hammers are bad because you can hit someone in the head with them. When hammers go on sale, everyone using them will have sore thumbs and be beating people on the head". When something is new, it's hard to recognize these arguments for what they are, but this *is* what they are.

Does Ripple require you to accept IOUs backed by thin air? No. Does Ripple prevent you from telling the difference? No. Does Ripple let you choose precisely which IOUs you accept? Yes. Will people occasionally make mistakes and get hurt by them? Probably. But the same is true of pretty much everything.

If you think about my federation example and imagine PayPal and Dwolla both federate through Ripple, it will be PayPal and Dwolla that will be managing the issuers. To the users of both payment systems, it will be just like they were paying another user on that same payment system.

Joel if the owners of Ripple decide to liquidate or dismantle for what ever reason what happens to the Ripple system? If XRP are centralized am I correct in thinking that if government wanted to shut you down the entire network would fall apart?

All they have to do is shutdown the gateways and the whole thing collapses. However, there is no difference for Bitcoin if you expect it to survive on a mass scale, with worldwide adoption. How valuable is something you can't spend? If you've stored all your wealth in Bitcoins but have no way to make it tangible again, you just lost all your money. Unless you're strictly a black market buyer and seller.

The first sentence on the ripple.com "Send money in dollars, euros, yen or Bitcoin. No added work or fees for foreign transactions." However how this works in practice is pretty much unexplained in the ripple.com or at least I could not find it.

Could someone write or draw a complete explanation how the currency exchange feature works. Lets say Alice is newcomer to ripple but she has yen bills in her pocket and wants to buy a computer from a webshop that wants to see no other currency than USD but has previously done business with a ripple gateway.

The explanation should cover the issues that what is the full set of what ripple-introduced currencies or IOUs are possible to be involved in the process and what choices Alice has to herself how to use the system?

The wiki does not clearly explain what are all the places that have any significance where XRP is used and for what? I heard from someplace that it funds all OpenCoin functions generously, but wiki says OpenCoin only gives them away for free and the only place they are ever used in the whole system is for silly small transaction costs. Somehow I don't think I understand. The same for various IOUs? Does the distributed ledger track all various IOUs or only XRPs? What is a role of user-IOUs? Do such things exist in the system?

What happens to the external currencies? Where does the yen bill end up to? Where do the dollar bills to the merchant come from? How does the gateway business operate in typical moneyflow? I mean what is the typical business of how a gateway connected to a very big merchant operate? How does some gateway that refuses to serve any merchants and only accepts ordinary people that typically want to deposit their paycheck in dollars to buy stuff from some outside rippleshop operate as money-flow in all different kinds of currencies/IOUs that a gateway should handle? For simplicity you could assume only one type of fiat money accepted per each gateway.

What exchange rates are used in each step? What mechanism sets them and where?Where and by whom is what XRP is worth in dollars determined? How much is an 1USD-BobsGatewayIOU worth in dollars? Where do the gateways get their profit or cover their expenses fulfilling the promise on the first sentence of ripple.com that there are no fees.

What is the complete list of parties that Alice must trust in this example one transaction? Who are the parties that the webshop needs to trust? Who are the parties that either gateway needs to trust? I mean for example which entities could leave Alice with a headache if they do some oddity including suddenly disappearing or claiming they have been hacked and lost all data and funds to thieves? What information Alice has to make judgement about these entities? Is it expected and typical that people are able to make sound decisions based on that amount of information? The answer could include examples from bitcoin-world. Which entities in bitcoin-world are such that there is enough information some random person is able to make an informed decision on and just not guesswork that they seem to have operated for a whole year meaning they must be good? What improvements are planned for ripple? OpenCoin could be in a position to force a minimum standard to all players. For example information about are the gateways financially healthy? Has a gateway been recently sold to a price that is a fraction of the user funds they are storing to some strange person nobody has heard of increasing the chance they are soon experiencing a declaration of a hack and loss of the funds?

These from just the top of my head. I did try to find answers to these but no success so far.

Joel if the owners of Ripple decide to liquidate or dismantle for what ever reason what happens to the Ripple system? If XRP are centralized am I correct in thinking that if government wanted to shut you down the entire network would fall apart?

The source code would become open source. There's any number of ways the network could continue and it's not possible to predict exactly how. It could, for example, continue with just the XRP that has been released to the public. Or a patch could be introduced to add mining. It would be up to the community to relaunch it.

I am an employee of Ripple. Follow me on Twitter @JoelKatz1Joe1Katzci1rFcsr9HH7SLuHVnDy2aihZ BM-NBM3FRExVJSJJamV9ccgyWvQfratUHgN

If you agree then why do I still see "open" and "any currency" on Ripple's front page? How about "open (when we feel like it)" and "any kind of IOU"? Truth in advertising goes a long way.

If you want to repeat the same points I've already addressed, please don't style them as a question to me, as if I haven't already answered them several times. You already know my answers. If you're so big on honesty, honestly say that you disagree with my positions, rather than asking me to repeat them yet again as if I've never responded to these points.

I just want to make sure that as many people see your painfully inadequate answers as possible.

Let me make one other thing clear too. XRP is designed to compete with Bitcoin. Ripple is not an innocent, friendly companion to Bitcoin. It is designed to replace it. OpenCoin's business strategy is based on holding XRP and hoping that it appreciates in value. It will only do so if it is used as a currency, just like Bitcoin. If more people use XRP, then less people use Bitcoin. I would have no problem with that if XRP were superior, but it's actually a 100% pre-mined currency, a bigger scam than RealSolid could have ever dreamed of.

In essence, we have people here supporting a 100% pre-mined currency replacing Bitcoin because it has a nice website and is promoted as payment network. Is that all it takes to fool some people? The only "noise" in this thread is gullible people and shills supporting an obvious scam. That people like misterbigg were vehemently against it and now support it is proof that people are being paid off.

I have nothing to do with ripplescam.org and have not talked with TradeFortress at all.

Could someone write or draw a complete explanation how the currency exchange feature works. Lets say Alice is newcomer to ripple but she has yen bills in her pocket and wants to buy a computer from a webshop that wants to see no other currency than USD but has previously done business with a ripple gateway.

Alice deposits the Yen bills at a gateway and the gateway issues here a Yen balance in the Ripple system. The webshop selects a USD gateway and configures its Ripple account to accept USD at that gateway. When Alice goes to buy, the Ripple network does pathfinding and matchmaking to find a way to exchange her Yen balance at her gateway for a USD balance at the webshop's gateway. Assuming both gateways are issuing balances that are liquid, a low-cost path should be found and the exchange takes place. Now, Alice's gateway owes her less, the webshop's gateway owes it more, and the webshop considers Alice to have paid them.

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The wiki does not clearly explain what are all the places that have any significance where XRP is used and for what? I heard from someplace that it funds all OpenCoin functions generously, but wiki says OpenCoin only gives them away for free and the only place they are ever used in the whole system is for silly small transaction costs. Somehow I don't think I understand.

I'm not sure what you don't understand.

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The same for various IOUs? Does the distributed ledger track all various IOUs or only XRPs? What is a role of user-IOUs? Do such things exist in the system?

An "IOU" is just a negative balance between two users in some currency. The ledger tracks balances between pairs of users.

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What happens to the external currencies? Where does the yen bill end up to? Where do the dollar bills to the merchant come from?

The gateways hold them. The Yen bill winds up at the gateway and as a result of the transaction, it's now owed by the gateway to whoever provided whatever Alice traded for her Yen balance. The dollar comes from created the offer of dollars that Alice accepted.

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How does the gateway business operate in typical moneyflow? I mean what is the typical business of how a gateway connected to a very big merchant operate? How does some gateway that refuses to serve any merchants and only accepts ordinary people that typically want to deposit their paycheck in dollars to buy stuff from some outside rippleshop operate as money-flow in all different kinds of currencies/IOUs that a gateway should handle? For simplicity you could assume only one type of fiat money accepted per each gateway.

A gateway makes a public offer to redeem its Ripple balances for currency. A gateway makes a public offer to accept currencies and issue Ripple balances. So long as the gateway is considered reliable, its balances will be generally valued at very close to face value because you can easily either redeem them for face value or trade them to someone else who can. You deposit currency at a Ripple gateway and can then trade balances with that gateway on the Ripple network as if they were the currency (or something very close to it).

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What exchange rates are used in each step? What mechanism sets them and where?

Ripple supports exchanges between any two asset pairs. An asset can be XRP or it can be a currency and an issuer (the issuer can be, but doesn't have to be, a gateway). The rates are set by supply and demand and anyone can place or take offers from the exchange order books. A payment can also draw from multiple exchanges to get better rates.

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Where and by whom is what XRP is worth in dollars determined? How much is an 1USD-BobsGatewayIOU worth in dollars?

Purely supply and demand.

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Where do the gateways get their profit or cover their expenses fulfilling the promise on the first sentence of ripple.com that there are no fees.

There are no *Ripple* fees (other than transaction fees and reserves). Gateways, like everyone and everything else, are free to charge whatever they want for anything they do. A gateway can charge an account creation fee (to create the account at the gateway, not to create a Ripple account), monthly account maintenance fees, deposit fees, withdrawal fees, and so on. They can also charge a "transfer fee" when their balances change hands. Currently, BitStamp (the largest gateway currently) charges an 0.2% transfer fee. Competition may bring this down in the future.

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What is the complete list of parties that Alice must trust in this example one transaction? Who are the parties that the webshop needs to trust?

Each party need only trust their own gateway. You never have to trust anyone you haven't chosen to trust. Payments are atomic.

I am an employee of Ripple. Follow me on Twitter @JoelKatz1Joe1Katzci1rFcsr9HH7SLuHVnDy2aihZ BM-NBM3FRExVJSJJamV9ccgyWvQfratUHgN

Let me make one other thing clear too. XRP is designed to compete with Bitcoin. Ripple is not an innocent, friendly companion to Bitcoin. It is designed to replace it. OpenCoin's business strategy is based on holding XRP and hoping that it appreciates in value. It will only do so if it is used as a currency, just like Bitcoin. If more people use XRP, then less people use Bitcoin. I would have no problem with that if XRP were superior, but it's actually a 100% pre-mined currency, a bigger scam than RealSolid could have ever dreamed of.

This argument is based on so many false assumptions I don't even know where to start. But even if all your assumptions were true, the argument is still completely absurd. If XRP is inferior to Bitcoin, why would any rational person worry about competition?

My bet is that you really believe it is superior and that's why you're so afraid of competition. In any event, Ripple is going after a whole new pie, not trying to split the existing pie with Bitcoin.

I am an employee of Ripple. Follow me on Twitter @JoelKatz1Joe1Katzci1rFcsr9HH7SLuHVnDy2aihZ BM-NBM3FRExVJSJJamV9ccgyWvQfratUHgN

Ripple is not open. It falsely suggests that it is by using the "open" word and additionally providing link to an open source repository.

You figured out our secret, the one thing we absolutely, positively didn't want the world to know. However did you do it? Was it the fact that we've said exactly this over and over? Or was it the five seconds you spent with a search engine?

Can you name any payment network that is as open as Ripple is already? Can you see all Western Union transactions. Is the ledger containing all PayPal balances public? Can anyone who wants to check the signature on every Visa transaction?

I am an employee of Ripple. Follow me on Twitter @JoelKatz1Joe1Katzci1rFcsr9HH7SLuHVnDy2aihZ BM-NBM3FRExVJSJJamV9ccgyWvQfratUHgN

Ripple is not open. It falsely suggests that it is by using the "open" word and additionally providing link to an open source repository.

You figured out our secret, the one thing we absolutely, positively didn't want the world to know. However did you do it? Was it the fact that we've said exactly this over and over? Or was it the five seconds you spent with a search engine?

Can you name any payment network that is as open as Ripple is now? Can you see all PayPal transactions. Is the ledger containing all PayPal balances public? Can anyone who wants to check the signature on every Visa transaction?

No, but still you are not "open".

Source code is not "open", you can do what you want in your closed code and nobody can really control you (except governments of course).

Also, because you are not Open Source, governments can shut you down at any given time they want.

But even if all your assumptions were true, the argument is still completely absurd. If XRP is inferior to Bitcoin, why would any rational person worry about competition?

Ripple is morally inferior because of its 100% pre-mine. I don't deny that it's an interesting system with potential uses (which it was before you were involved in it). I can do interesting things with an iPhone too, at the cost of being put in a cage controlled by Apple. Sadly many people have no problem being turned into animals.

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My bet is that you really believe it is superior and that's why you're so afraid of competition. But I'm assuming you're being rational which might be a mistake.

I don't own a single Bitcoin. I don't have an address in my signature begging for coins. I don't care if it gets displaced by a superior currency. All I want is the freedom and fairness that Ripple does not provide.

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In any event, Ripple is going after a whole new pie, not trying to split the existing pie with Bitcoin.

There is nothing to prevent XRP from being used as a currency. It is already being traded on markets like a currency. Why won't it compete with Bitcoin? Why did your investors even give you money if XRP wasn't going to increase in value? You saying something doesn't make it true.

So much hate just because you won't be able to payback for your mining rigs and ASICS?Bitcoiners like to talk about free market up to the point when a real competitor comes. Then instead of fighting and making bitcoin a better currency they just shout scam all over the place.Let the strongest survive.If Ripple takes over Bitcoin, that means that Ripple is superior. I would be happy to know that Joel and other people behind OpenCoin got rich. They would definitely deserve it.End of story.

PS Actually I'm surprised that Joel wastes his time here answering the same endless stream of questions.

That one I addressed in the very post you are responding to. Seriously, you want me to do it again?

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Source code is not "open", you can do what you want in your closed code and nobody can really control you (except governments of course).

Not true. All ledgers are public, and signed by us. All differences between ledgers must be justified by a transaction signed by the account that issued it. All transactions are public and each transaction includes the precise "delta" is applied to the ledger. We can't just do whatever we want.

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Also, because you are not Open Source, governments can shut you down at any given time they want.

The code would automatically become open source if that happens. Developers have that in their contract and any number of people have the source code and understand these terms. I've discussed the contingency plans for that case several times, I think at least once in this very thread.

I am an employee of Ripple. Follow me on Twitter @JoelKatz1Joe1Katzci1rFcsr9HH7SLuHVnDy2aihZ BM-NBM3FRExVJSJJamV9ccgyWvQfratUHgN

Ripple is not open. It falsely suggests that it is by using the "open" word and additionally providing link to an open source repository.

You figured out our secret, the one thing we absolutely, positively didn't want the world to know. However did you do it? Was it the fact that we've said exactly this over and over? Or was it the five seconds you spent with a search engine?

Can you name any payment network that is as open as Ripple is already? Can you see all Western Union transactions. Is the ledger containing all PayPal balances public? Can anyone who wants to check the signature on every Visa transaction?

So you manage to marry this most open network with the most esoteric currency ever, good job....Can I know the total amount of XRPs in circulation already?

Joel if the owners of Ripple decide to liquidate or dismantle for what ever reason what happens to the Ripple system? If XRP are centralized am I correct in thinking that if government wanted to shut you down the entire network would fall apart?

The source code would become open source. There's any number of ways the network could continue and it's not possible to predict exactly how. It could, for example, continue with just the XRP that has been released to the public. Or a patch could be introduced to add mining. It would be up to the community to relaunch it.

I think the problem is that as Ripple grows there are, in my opinion two eventualities, mandatory shut down by the government or in bed with the government in order to stay in business. I am not sure I can trust my investments in a company who pre-mined to such an extent to release code opensource, in the event of either situation, providing such source data is even allowed to be released. Not to mention the possibility of the team having a fall out and trying to sue each other lol, I highly doubt much effort would go into the the source code in this event. Obviously these are hypothetical situations but I think these risks will never allow Ripple to reach that of Bitcoin, unless Bitcoin fails totally in which case Ripple might be one of few alternatives left standing.

I do feel Ripple could be more transparent in how they operate but at least Joel does a good job at customer relations, Josh from BFL should take a leaf from his book lol.

So much hate for SolidCoin just because you won't be able to payback for your mining rigs and ASICS?Bitcoiners like to talk about free market up the point when a real competitor comes. Then instead of fighting and making bitcoin a better currency they just shout scam all over the place.Let the strongest survive.If SolidCoin takes over Bitcoin, that means that SolidCoin is superior.I would be happy to know that RealSolid and other people behind SolidCoin got rich. They would definitely deserve it.

PS Actually I'm surprised that RealSolid wastes his time here answering the same endless stream of questions.

Ripple supporters sound so much like SolidCoin supporters that it's uncanny. OpenCoin is free to make what they want and we are free to explain why their products are a scam. That is the free market.

The code would automatically become open source if that happens. Developers have that in their contract and any number of people have the source code and understand these terms. I've discussed the contingency plans for that case several times, I think at least once in this very thread.

That one I addressed in the very post you are responding to. Seriously, you want me to do it again?

Does not matter how many times you address it, your website suggests that it is "open", while it is not - Lie #1.Also, it suggests it is world's first global payment network, while Bitcoin is the first - Lie #2.

Even after reading your wiki it was still clear to me that the software is open. So I think it is manipulative on purpose.